FANCY CORPORATION LTD,MUMBAI vs. ASSISTANT DIRECTOR OF INCOME TAX, CPC , MUMBAI

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ITA 3958/MUM/2023Status: DisposedITAT Mumbai25 February 2025AY 2018-1911 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that an inadvertent mistake on the part of the assessee in not mentioning the details of exempt income in the relevant schedule cannot be a ground to deny the relief if the assessee is otherwise eligible. The object of assessment is to determine the correct total income. The Tribunal noted that identical issues were examined by coordinate benches in Sumanchandra G. Mehta Vs ITO (ITA 564 & 565/Mum/2012) and Goodwill Management Pvt Ltd Vs DCIT (ITA No. 670/Bang/2020), where similar inadvertent errors in filing e-returns were not considered fatal. Following these precedents, the Tribunal restored the matter to the file of the Assessing Officer (AO) with a direction to allow the exemption claimed by the assessee, if otherwise found eligible. The appeal was partly allowed.

What were the facts?

The assessee, Fancy Corporation Ltd., filed its return of income for assessment year 2018-19, declaring a loss and claiming a refund. The assessee received a notice under section 139(9) regarding a defect where TDS credit was claimed but corresponding income was omitted. The assessee responded, stating that Rs. 15,00,000 received as a token of appreciation and gratitude was a capital receipt and not taxable. Subsequently, an intimation under section 143(1)(a) determined the total income at Rs. 14,22,800. The assessee filed a rectification application under section 154, which was rejected. The assessee's appeal to the ITAT challenges the order of the National Faceless Appeal Centre, Delhi, dated September 6, 2023, which upheld the adjustment of Rs. 15,00,000.

What were the issues?

1. Whether the adjustment of Rs. 15,00,000 made under section 143(1) of the Income Tax Act, 1961, was justified, considering the assessee claimed it as a capital receipt but inadvertently failed to mention it in Schedule 'EI' (Exempt Income) instead of Schedule 'BP' (Business Profits)? (Mixed question of law and fact, turning on Section 143(1) and principles of bonafide mistakes). Assessee's contentions: The amount of Rs. 15,00,000 received as a token of appreciation and gratitude is a capital receipt and not taxable. The omission to mention it in Schedule 'EI' was a bonafide mistake, and the adjustment under section 143(1) was not justified. Relied on ACIT Vs. Shri Sameer Sudhakar Dighr (ITA No. 1327/M/2016). Revenue's contentions: The revenue relied on the orders passed by the revenue authorities.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 250,Section 139(9),Section 154

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI

Before: HON’BLE SHRI SANDEEP GOSAIN

For Appellant: Shri H.N. Motiwalla
For Respondent: Shri Sunil Agawane, Sr.DR
Hearing: 28.01.2025Pronounced: 25.02.2025

आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / The CIT(A) 3. आयकर आयु�(अपील) / Concerned CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मु�बई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER, स�ािपत �ित //True Copy//

1.

उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु�बई मु�बई / ITAT, Mumbai मु�बई मु�बई

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